Chak oun, Mohamed
A icle
Heal h and economic g ow h: new e idence om a panel
h eshold model
Cogen Economics & Finance
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Taylo & F ancis G oup
Sugges ed Ci a ion: Chak oun, Mohamed (2024) : Heal h and economic g ow h: new e idence om a
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Vol. 12, Iss. 1, pp. 1-13,
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Heal h and economic g ow h: new e idence om
a panel h eshold model
Mohamed Chak oun
To ci e his a icle: Mohamed Chak oun (2024) Heal h and economic g ow h: new
e idence om a panel h eshold model, Cogen Economics & Finance, 12:1, 2331010, DOI:
10.1080/23322039.2024.2331010
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DEVELOPMENT ECONOMICS | RESEARCH ARTICLE
Heal h and economic g ow h: new e idence om a panel h eshold
model
Mohamed Chak oun
a,b
a
Depa men o Logis ics, Tou ism and Se ice Managemen (LTSM), Ge man Uni e si y o Technology in Oman, Musca ,
Oman;
b
Facul y o Economics and Managemen o S ax, S ax Uni e si y, S ax, Tunisia
ABSTRACT
The pape examines he ela ionship be ween heal h and economic g ow h using a
dynamic panel wi h h eshold e ec and endogenei y. The s udy uses a sample o
136 coun ies o e he pe iod o 1965–2015 and he esul s indica e ha he ela ion-
ship be ween heal h and economic g ow h is nonlinea . The indings sugges ha he
impac o heal h on economic g ow h is only posi i e in coun ies ha ha e a ained
minimum benchma ks o heal h imp o emen . These indings ca y signi ican policy
implica ions. Low-income coun ies need a comp ehensi e app oach, encompassing
mul iple ac o s, such as educa ion enhancemen , p oduc i i y boos , and en ep e-
neu ship p omo ion, ha go beyond heal h p omo ion o os e subs an ial economic
g ow h. In coun ies al eady a aining sa is ac o y heal h ou comes, policies p io i izing
imp o ed heal h ou comes, h ough di ec ing in es men s owa ds Resea ch and
De elopmen can se e as an e ec i e means o p omo e sus ainable economic
g ow h.
IMPACT STATEMENT
The pape p o ides an in-dep h analysis o he ela ionship be ween heal h and eco-
nomic g ow h. By explici ly examining po en ial non-linea i ies and h esholds, he
s udy o e s insigh s in o how a ia ions in heal h s a us may in luence economic
g ow h di e en ly ac oss di e en h esholds o s ages o de elopmen . By iden i ying
he key heal h h esholds, he esea ch p o ides policymake s wi h ac ionable insigh s
o alloca e esou ces e ec i ely. This guidance is c i ical o c a ing a ge ed policies
ha maximize he impac o heal h in es men s on economic de elopmen .
ARTICLE HISTORY
Recei ed 23 Oc obe 2023
Re ised 22 Janua y 2024
Accep ed 10 Ma ch 2024
KEYWORDS
Heal h; economic g ow h;
h eshold models;
ins umen al a iables; li e
expec ancy
JEL CLASSIFICATION
CODES
I10; O47; C22
REVIEWING EDITOR
Goodness Aye, Uni e si y o
Ag icul u e, Maku di,
Nige ia
SUBJECTS
Heal h & De elopmen ;
Economics; Econome ics
1. In oduc ion
The nexus be ween human capi al and economic g ow h cons i u es a longs anding ocal poin in eco-
nomic inqui y. The ajec o y se by new g ow h heo y unde sco es he pi o al ole o human capi al
accumula ion as a undamen al ca alys o a na ion’s weal h and p ospe i y (see o ins ance: Ba o,
1991; Benhabib & Spiegel, 1994; Rome , 1990).
While mac oeconomis s widely acknowledge he con ibu ion o human capi al o economic g ow h,
hei empi ical inqui ies p edominan ly gauge human capi al h ough he p ism o educa ion (Bloom
e al., 2001). No wi hs anding, insigh s om ea ly hinke s, such as Ben ham (1789) and Ma x (1867)
accen ua ed he signi icance o heal h as a pi o al componen o human well-being and ep oduc ion.
Simila ly, schola s like Mushkin (1962) and Schul z (1961) unde sco ed ha heal h cons i u es a o m o
human capi al as c ucial as educa ion.
Howe e , i was only in he 1980s and 1990s, concomi an wi h he de elopmen o endogenous g ow h
heo ies and he eme gence o heal h economics as a dis inc ield o s udy, ha a subs an ial esu gence
o in e es in heal h in es men , inancing, and hei epe cussions on economic g ow h ma e ialized.
CONTACT Mohamed Chak oun [email p o ec ed] Depa men o Logis ics, Tou ism and Se ice Managemen (LTSM),
Ge man Uni e si y o Technology in Oman, Musca , Oman
This a icle has been co ec ed wi h mino changes. These changes do no impac he academic con en o he a icle.
ß2024 The Au ho (s). Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been
published allow he pos ing o he Accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
COGENT ECONOMICS & FINANCE
2024, VOL. 12, NO. 1, 2331010
h ps://doi.o g/10.1080/23322039.2024.2331010
P esen ly, he ole o heal h in economic g ow h ga ne s wide accep ance ac oss bo h heo e ical and
empi ical ealms. In conjunc ion wi h educa ion, heal h eme ges as a sec o encompassing he p incipal
d i e s o endogenous g ow h, including esea ch and de elopmen , human capi al, and public expend-
i u e (Ba o & Sala-I-Ma in, 1995; Lim, 1996).
Despi e he g owing consensus on he ole o heal h in economic g ow h, a p onounced disc epancy
pe sis s be ween heo e ical p oposi ions and empi ical in es iga ions. Recen heo e ical li e a u e
inc easingly acknowledges a non-linea co ela ion be ween heal h and economic g ow h. Howe e , his
heo e ical insigh has no been ully ansla ed in o empi ical in es iga ions, as exis ing s udies p edom-
inan ly ely on linea models o explo e he ela ionship be ween heal h and economic g ow h. This dis-
c epancy highligh s a no able gap in he cu en esea ch pa adigm, wi h he inhe en complexi ies and
po en ial h esholds in his ela ionship emaining la gely unexplo ed o inadequa ely add essed in
empi ical s udies. This unde sco es he necessi y o mo e ad anced me hodological app oaches o
b idge he gap be ween heo y and empi ical explo a ion.
In his pape , we use a panel h eshold model ha add esses his esea ch gap by acknowledging
and explo ing nonlinea i ies in he ela ionship be ween heal h and economic g ow h. The ad an age o
such a model is ha i allows o he e ogenei y in he con e gence and di e gence egimes, in e ms o
g ow h a es and le els. I sugges s ha economies ha di e in hei ini ial condi ions may no con-
e ge. Such an app oach, conside ing he exis ence o mul iple equilib ia, is hus use ul o allow he e o-
genei y in he speci ica ion o con e gence equa ions (Be na d & Jones, 1996).
Conside ing h eshold e ec s in he ela ionship be ween heal h s a us and economic g ow h is no e-
wo hy o se e al compelling easons: di e en coun ies may exhibi a ying ela ionships be ween
heal h and economic g ow h. Th eshold e ec s could di e based on ini ial heal h condi ions, ins i u-
ional se ups, and s ages o economic de elopmen . In es iga ing hese he e ogenei ies helps comp e-
hend why some coun ies expe ience apid economic g ow h wi h inc emen al heal h imp o emen s,
while o he s may no , he eby p o iding ailo ed policy ecommenda ions o di e en con ex s.
The con ibu ion o his s udy o he exis ing li e a u e is 3- old. Fi s ly, i add esses a c i ical esea ch
gap p e alen in ea lie empi ical s udies by u ilizing a panel h eshold model, di e ging om he dominan
use o linea models. Secondly, by employing his inno a i e app oach, he pape del es deepe in o he
heal h-economic g ow h nexus, o e ing a nuanced comp ehension. This explo a ion o po en ial non-line-
a i ies and h esholds g an s insigh s in o how di e se heal h s a uses in luence economic g ow h, a ying
ac oss dis inc de elopmen al h esholds. Such an analysis augmen s he exis ing li e a u e by anscending
o e simpli ied linea assump ions, en iching unde s anding wi h nuanced complexi ies. Thi dly, he s udy’s
indings ca y subs an ial policy implica ions by pinpoin ing heal h h esholds wi h signi ican impac s on
economic g ow h. By illumina ing hese c i ical junc u es, he esea ch equips policymake s wi h ac ionable
insigh s o op imize esou ce alloca ion e ec i ely, he eby guiding he o mula ion o a ge ed and e i-
cien policy in e en ions o p omo ing economic de elopmen h ough s a egic heal h in es men s.
The es o he pape is o ganized as ollows: Sec ion 2 c i ically examines he cu en body o li e a-
u e conce ning he nexus be ween heal h and economic g ow h. Sec ion 3 delinea es he econome ic
model and es ima ion echnique employed in his s udy. Sec ion 4 p esen s and discusses he esul s.
Finally, Sec ion 5 summa izes he key indings, and p o ides ecommenda ions o policymake s.
2. Li e a u e e iew
Concep ually, heal h can be iewed as a ac o o p oduc ion (Lucas, 1988; Mankiw e al., 1992). Thus, a
he mac o-le el, i is he accumula ion o heal h, i.e. an inc ease in li e expec ancy, ha may cause eco-
nomic g ow h. Con e sely, heal h can be iewed as a s ock (Nelson & Phelps, 1966). Consequen ly, i is
he le el o heal h, i.e. he a e age le el o li e expec ancy, ha may in luence eal ou pu .
Heal h’s impac on economic g ow h has been ex ensi ely explo ed in heo e ical and empi ical s ud-
ies, e ealing a complex and nuanced ela ionship. While p e ailing li e a u e o en indica es a posi i e
link be ween heal h and g ow h, con lic ing indings challenge his consensus.
Empi ical examina ions o he impac o heal h on g ow h o en u ilize c oss-sec ional and panel da a,
in ol ing he eg ession o he g ow h a e o eal GDP pe capi a agains he le el o heal h (Bloom &
Canning, 2005).
2 M. CHAKROUN
Seminal li e a u e commonly es ablishes a posi i e co ela ion be ween heal h s a us, measu ed by li e
expec ancy a bi h and/o adul su i al a es, and economic g ow h (Aghion e al., 2008,2010; Ba o &
Lee, 1994; Ba o & Sala-I-Ma in, 1995; Bloom e al., 2001,2003,2004,2014; Jamison e al., 2005; Knowles &
Owen, 1995,1997; Li & Huang, 2009; Maye , 2001a,2001b; Maye e al., 2001; McDonald & Robe s, 2002;
Lo en ze e al., 2008; Sachs & Wa ne , 1995,1997; Sala-I-Ma in, 1997,2005; Sala-I-Ma in e al., 2004;
Ridhwan e al., 2022).
Recen empi ical inqui ies, u ilizing s a e-o - he-a econome ic me hodologies, consis en ly alida e
he posi i e nexus be ween heal h indica o s and economic g ow h.
Muni and Shahid (2020) used annual panel da a o ou Sou h Asian cou ie s, om 1980 o 2018
and applied he panel ARDL model o analyze he long un and sho un impac o li e expec ancy on
economic g ow h. They epo ed a posi i e and signi ican ela ionship. Thei esul s a e con i med by
Ahmad and Nayyab (2021).
He and Li (2020) examined he long- and sho - e m linkages be ween li e expec ancy and economic
g ow h ac oss 65 coun ies om 1980 o 2014. Employing panel coin eg a ion analysis and causali y
es s, he es ima ions un eiled signi ican ly posi i e long- un ela ionships be ween li e expec ancy and
GDP pe capi a. Howe e , hese ela ionships exhibi ed a ia ions ac oss aging le els, wi h a s onge
posi i e impac o li e expec ancy on economic g ow h obse ed in g oups wi h highe le els o aging.
Lawanson and Uma (2021) in es iga ed he in e play be ween li e expec ancy, po e y incidence,
and economic g ow h in Nige ia, u ilizing he ully modi ied o dina y leas squa es me hod. The esul s
unde sco ed a posi i e con ibu ion o heal h o economic g ow h.
Al e na i e s udies ocused on he impac o heal h in es men s on economic g ow h a he han
examining he co ela ion be ween heal h accumula ion and g ow h. Unsu p isingly, mos o hese s ud-
ies conclude a posi i e associa ion be ween heal hca e expendi u e and economic g ow h.
Fo ins ance, Gyimah-B empong (1998) and Gyimah-B empong and Wilson (2004) ound a posi i e
and signi ican causal ela ionship be ween public spending on heal h and economic g ow h in A ican
coun ies. This esul is suppo ed by Heshma i (2001,2018) and Ri e a and Cu ais (1999a,1999b,2003,
2004) o de eloped coun ies.
Ye and Zhang (2018) sc u inized he causal ela ionship be ween heal hca e expendi u e and eco-
nomic g ow h ac oss 31 coun ies spanning 1986–2007, employing panel eg ession analysis o e eal a
s imula ing e ec o heal hca e expendi u e g ow h on economic g ow h.
Howe e , ecen s udies in es iga ing he e ogenei y and asymme y in he ela ionship be ween
heal h expendi u e and economic g ow h ha e challenged his posi i e co ela ion.
Wu e al. (2021) used a quan ile-on-quan ile app oach o analyze he dynamics be ween he quan iles
o heal hca e expendi u e and economic g ow h in a pooled sample o 40 Asian coun ies. Thei esul s
indica e ha an ele a ion in heal hca e expendi u e quan iles ac oss hese na ions does no ensu e a
p opo ional escala ion in he in luence o heal hca e expendi u e on economic g ow h.
Simila ly, Zhou e al. (2021) employed a Time-Va ying Pa ame e model o in es iga e he in luence o
heal hca e expendi u e on economic g ow h in China. The esul s indica e a nega i e ela ionship in he
sho un and a posi i e associa ion in he long un, accompanied by no able he e ogenei y ac oss dis-
inc le els o economic de elopmen wi hin China.
Indeed, he posi i e and mono onic associa ion be ween heal h and g ow h has been challenged
ex ensi ely by Acemoglu and Johnson (2007), Bha ga a e al. (2001), and Ha wig (2010).
Bha ga a e al. (2001) ound la ge posi i e e ec s o adul su i al a es on g ow h a es o poo and
de eloping coun ies. Con e sely, o highly de eloped coun ies, he es ima ed e ec o adul su i al
a es on g ow h a es was nega i e.
Acemoglu and Johnson (2007) eg essed pe capi a GDP g ow h agains he g ow h in li e expec ancy
using a sample o 59 coun ies, om Wes e n Eu ope, Oceania, he Ame icas, and Asia, o e he pe iod
1940–1980. They ound no e idence ha he inc ease in li e expec ancy led o as e g ow h o income
pe capi a.
Ha wig (2010) a gued ha , based on OECD da a, he e is no e idence suppo ing he no ion ha he
o ma ion o heal h capi al h ough heal hca e spending o he ise in li e expec ancy exe s a posi i e
G ange -causal impac on pe capi a GDP g ow h.
COGENT ECONOMICS & FINANCE 3
Bloom e al. (2009) con ended ha he p oposi ion sugges ing a decline in income pe capi a due o
heal h enhancemen s is coun e in ui i e. Howe e , hey belie e ha he income esponse o heal h
imp o emen s is no ins an aneous bu in ol es a ime lag. Accoun ing o his empo al delay esul s in
posi i e es ima ions o bo h he in luence o p io heal h s a us and he e ec s o heal h imp o emen s
on he g ow h o pe capi a income.
Becke e al. (2005) a gued ha coun ies s a ing wi h be e heal h s a us a e likely o g ow as e
han coun ies wi h a lowe ini ial heal h le el. Ne e heless, his ela ionship is subjec o diminishing
e u ns. Such an idea has been adop ed by o he esea che s (Aghion e al., 2010; Bloom e al., 2014)
who assume dec easing e u ns o heal h in es men s a he mac o le el. Dec easing e u ns a e e en
ad anced as a plausible explana ion o he indings o Acemoglu and Johnson (2007) and Bha ga a
e al. (2001).
Recen li e a u e ecognizes ha he ela ion be ween heal h and economic g ow h changes o e ime
(Weil, 2014) and ac oss he p ocess o economic de elopmen (Bloom e al., 2019; Ngwen & Kou y, 2015).
A subs an ial body o heo e ical li e a u e posi s a non-linea ela ionship be ween heal h and eco-
nomic g ow h. Boucekkine e al. (2002), Cip iani (2000), De la C oix and Licand o (1999), Fus e (1999),
and Taba a (2005) ha e de i ed, based on o e lapping gene a ion models, an in e ed U-shaped ela-
ionship be ween li e expec ancy and economic g ow h. Blackbu n and Cip iani (2002) de eloped an
o e lapping gene a ion model in which he economy exhibi s mul iple equilib ia. They conclude ha
he e exis s a c i ical le el o human capi al below which he economy ends up plunging in o a po e y
ap. A
ısa and Pueyo (2006) demons a e he exis ence o a di e en ia ed impac o heal h go e nmen
expendi u e on economic g ow h. This impac appea s o be posi i e in de eloping coun ies, while i is
nega i e in de eloped coun ies. Kuhn and P e ne (2016) de eloped a g ow h model wi h o e lapping
gene a ions o examine he condi ions unde which expanding heal hca e enhances g ow h and wel a e.
They demons a e ha heal hca e inc eases p oduc i i y, bu i also di e s labo away om p oduc ion
and R&D. On he o he hand, Reinha (1999) de i es a nega i e ela ionship be ween public spending
on heal h and g ow h, e en hough he link be ween g ow h and li e expec ancy seems o be a he
posi i e.
The exis ence o such non-linea i ies has been highligh ed in he empi ical li e a u e (Be h
elemy,
2008; Kelley & Schmid , 1995; Sachs & Wa ne , 1997). Sachs and Wa ne (1997) ound ha he impac o
heal h on economic g ow h is posi i e bu dec eases wi h he s ock o heal h capi al. Simila ly,
Be h
elemy (2008), based on a mul iple egime model, shows ha heal h is among he main ac o s ha
ha e con ibu ed o keeping A ican coun ies in a po e y ap. This esul is suppo ed by Aghion e al.
(2008) who conside ha he low g ow h o de eloping coun ies is mainly due o hei low ini ial le el
o li e expec ancy. Simila ly, Bloom e al. (2009) epo ed ha , o e he pe iod 1940–2000, coun ies ini-
ially cha ac e ized by high li e expec ancy also showed as e g ow h in pe capi a income.
Ce ella i and Sunde (2011) con ibu e o his discou se by examining he causal impac o li e
expec ancy on pe capi a income g ow h, inding a non-mono onic e ec . They asse ha heal h
imp o emen s do no s imula e economic g ow h unless a coun y has unde gone he demog aphic
ansi ion om high o low a es o e ili y and mo ali y.
Si ag e al. (2020) ein o ce his pe spec i e wi h hei dynamic panel h eshold me hodology, high-
ligh ing a non-linea co ela ion be ween li e expec ancy and economic g ow h. They posi ha li e
expec ancy posi i ely in luences economic g ow h up o a ce ain h eshold le el.
Yıldı ım e al. (2020) applied clus e and panel h eshold analyses o sc u inize he ela ionship
be ween li e expec ancy and economic g ow h ac oss 12 OECD coun ies du ing 1999–2016. The ind-
ings indica ed ha an inc ease in li e expec ancy a bi h in coun ies cha ac e ized by highe heal h s a-
us yielded no signi ican impac on economic g ow h. Howe e , o coun ies wi h lowe heal h s a us,
such an inc ease posi i ely in luenced economic g ow h.
In conclusion, he li e a u e p esen s a nuanced and in ica e ela ionship be ween heal h and eco-
nomic g ow h, ma ked by concep ual di e gences, con lic ing empi ical indings, and a g owing body o
e idence suppo ing a non-linea associa ion. These complexi ies necessi a e a c i ical lens when in e -
p e ing he b oade implica ions o heal h policies and economic de elopmen .
4 M. CHAKROUN
3. Empi ical amewo k
In he c oss-coun y g ow h models, i has become a common p ac ice o es he empi ical linkages
be ween g ow h and heal h using he ollowing s anda d linea g ow h equa ion:
G ow hi¼aþbHeal hiþd0Xiþei(1)
whe e i¼1, 2, …Nis he coun y indica o and eiis an e o e m. G ow h deno es he g ow h a e o
eal GDP pe capi a, Heal h is he measu e o heal h imp o emen s and Xi ep esen s a ec o o con ol
a iables.
To allow o nonlinea i y in he ela ionship, we ex end Equa ion (1) in o a h eshold eg ession model
ha akes he ollowing gene al o m:
yi¼h0
1ziIq
ic
ðÞ
þh0
2ziIðqi>cÞþei(2)
whe e yi¼G ow hi,zi¼ðHeal hi,X0
iÞ0,hj¼ðb,d’Þ0,j¼1, 2. I(.) ep esen s an indica o unc ion ha
akes he alue 1 i he a gumen in pa en hesis is alid, and 0 o he wise. qiis an exogenous h eshold
a iable used o spli he da a in o di e en egimes o g oups. The h eshold pa ame e is c2C,
whe e Ca s ic subse o he suppo o qi:This model allows he eg ession pa ame e s h1and h2 o
swi ch be ween egimes depending on whe he qiis smalle o la ge han he unknown h eshold
alue c:
Equa ion (2) can be ew i en in mo e de ailed o m as ollows:
G ow hi¼b1Heal hiIq
ic
ðÞ
þb2Heal hiIq
i>c
ðÞ
þd1’XiIq
ic
ðÞ
þd2’XiIq
i>c
ðÞ
þei(3)
Assuming ha all explana o y a iables a e exogenous, Hansen (2000) sugges s Equa ion (2) o be
es ima ed using O dina y Leas Squa e. Condi ional on he abo e es ima o s, we hen can es ima e he
h eshold alue by minimizing he concen a ed sum o squa ed e o s unc ion (SSE).
Howe e , he h eshold es ima ion me hod p oposed by Hansen (1999,2000) is no sui able when
one o mo e explana o y a iables a e endogenous. Since we conside ha he heal h a iable is highly
likely o be endogenous, we a he choose o es ima e Equa ion (3) by applying he Cane and Hansen
(2004) ins umen al a iable h eshold eg ession model (IVTR).
The educed o m o he endogenous a iable can be de ined as ollows:
Heal hi¼gs
i,p
ðÞ
þui(4)
whe e pi is an unknown pa ame e ec o , g is a linea unc ion and uiis a andom e o . The ec o si
ep esen s a se o ins umen al a iables ha a e no included in he g ow h eg ession, along wi h
o he exogenous a iables o he model. A e eplacing he endogenous a iable by i s educed o m,
Equa ion (3) can be w i en as ollows:
g ow hi¼b1gs
i,p
ðÞ
Iq
ic
ðÞ
þb2gs
i,p
ðÞ
Iq
i>c
ðÞ
þd1’XiIq
ic
ðÞ
þd2’XiIq
i>c
ðÞ
þ i (5)
whe e i ¼b1uiIðqicÞþb2uiIðqi>cÞþei
The pa ame e s a e es ima ed sequen ially. Fi s , we es ima e he educed o m pa ame e pand
ob ain he p edic ed alue d
Heal hi¼^
gi¼gs
i,^
p
ðÞ
¼^
p’si:Second, we u n o he es ima ion o he
h eshold pa ame e cwhich is chosen o minimise he sum o squa ed esiduals om a sequence o
eg essions o g ow h on he p edic ed alue o he heal h a iable. Thi d, we es ima e he slope pa am-
e e s (b1,b2,d1,d2Þby 2SLS o GMM on he spli sample implied by ^
c:
To es he exis ence o he h eshold e ec , Cane and Hansen (2004) sugges he Sup emum Wald
es s a is ic. Fi s , we ix c2C o any alue and he equa ion (19) is es ima ed by GMM. Then, o he
ixed alue o c, he Wald s a is ic unde H0 is cons uc ed as ollows:
wnc
ðÞ
¼^
h1c
ðÞ
−^
h2c
ðÞ
hi
0^
V1c
ðÞ
þ^
V2c
ðÞ
hi
−1^
h1c
ðÞ
−^
h2c
ðÞ
hi (6)
Repea ing he calcula ion o all c2C, we can ob ain he Sup s a is ic as he g ea es alue o he
calcula ed wn:
Sup W ¼sup
c2s
wnc
ðÞ (7)
COGENT ECONOMICS & FINANCE 5
The asymp o ic dis ibu ion o his s a is ic is no s anda d because o he p esence o he nuisance
pa ame e c. Fo his eason, Cane and Hansen (2004) use a boo s apping p ocedu e o ge he
p- alue.
3.1. Da a desc ip ion
Equa ion (5) is es ima ed o 136 coun ies obse ed o e he pe iod 1965–2015. All da a a e a e aged
o e pe iods o i e yea s. Gi en ha he IV h eshold model doesn’ ole a e unbalanced samples, all
missing obse a ions ha e been d opped, educing he sample o al numbe o obse a ions om 1496
o 1075 obse a ions.
Da a on popula ion, income, and physical capi al a e om he Penn Wo ld Tables (Feens a e al.,
2022). Heal h a iables a e om he Uni ed Na ions (2022). In line wi h Bloom e al. (2022), heal h s ock
is p oxied by adul su i al a es, which measu e he p obabili y o su i ing om age 15 o 60. Fo
obus ness check pu poses, we use li e expec ancy as an al e na i e measu e o heal h imp o emen s.
Da a on educa ion a e om Ba o and Lee (2001). Educa ion is p oxied by yea s o seconda y schooling
o he wo king-age popula ion 15–64. Table A1 in Appendix A epo s desc ip i e s a is ics o he es i-
ma ion sample, and Table A2 epo s he co ela ion ma ix.
4. Empi ical esul s and discussion
4.1. The linea model
Table 1 epo s pa ame e es ima es o he linea IV GMM model. The esul s a e in line wi h Bloom
e al. (2022). Adul su i al a e has he expec ed posi i e impac on economic g ow h and he es i-
ma ed coe icien is signi ican a he 1% signi icance le el. Using li e expec ancy as an al e na i e meas-
u e o popula ion heal h o GDP pe wo ke as an al e na i e dependen a iable doesn’ al e he
indings. As discussed p e iously, he alidi y o such indings elies on he undamen al assump ion ha
he ela ionship be ween heal h and economic g ow h is basically linea . We p oceed nex o es his
assump ion using he me hodology p oposed by Cane and Hansen (2004).
4.2. Linea i y es s
The i s s ep be o e es ima ing he h eshold model is o selec among he candida e h eshold a ia-
bles he one ha mos s ongly ejec s he linea i y hypo hesis. The e o e, h ee a iables we e selec ed:
ini ial su i al a e (SURV
0
), ini ial li e expec ancy (LEX
0
), and ini ial GDP (GDP
0
). The choice o he i s
Table 1. The mac oeconomic e u n o heal h: linea GMM es ima es.
Dependen a iable
G ow h a e o income pe capi a G ow h a e o income pe wo ke
(1) (2) (3) (4)
Log income pe capi a (−1) −0.5097 −0.5981
(0.1646) (0.1924)
Log income pe wo ke (−1) −0.5807 −0.6913
(0.1873) (0.1768)
Su i al a e 0.04919 0.06238
(0.01356) (0.01751)
Li e expec ancy 0.06522 0.08637
(0.01850) (0.02266)
Seconda y schooling 0.4551 0.5923 0.4507 0.5988
(0.1381) (0.1659) (0.1374) (0.09965)
G ow h o wo king age popula ion 0.8923 0.9448 −0.1015 −0.05101
(0.08162) (0.07922) (0.08151) (0.08484)
Popula ion g ow h a e −0.1967 −0.0008222 −0.1848
(0.1381) (0.1573) (0.1395)
G ow h o capi al pe wo ke 0.4638 0.5166 0.4660 0.5365
(0.04674) (0.04529) (0.04678) (0.04604)
Obse a ions 1075 1075 1075 1075
Coun ies 136 136 136 136
J- es p- alue 0.2654 0.3806 0.7128 0.9086
No e: indica es s a is ical signi icance a he 1%, espec i ely. S anda d e o s a e in pa en heses.
6 M. CHAKROUN
wo a iables is p ima ily in ended o es he hypo hesis o dec easing ma ginal e u ns o heal h. Thus,
we would like o es whe he heal h imp o emen s a e less likely o ansla e in o highe g ow h a es
in coun ies ini ially cha ac e ized by be e popula ion heal h condi ions. The hi d h eshold a iable
(GDP
0
) has been chosen o es he hypo hesis ha he impac o heal h on economic g ow h changes
be ween coun ies ha di e in hei ini ial economic condi ions. Rejec ing he linea i y hypo hesis
ul ima ely means ha economies ha di e in hei ini ial s ock o heal h o in economic condi ions,
may no con e ge and may he e o e be on di e en g ow h ajec o ies.
As we can ob iously obse e om Tables 2 and 3, he null hypo hesis o a linea ela ionship
be ween economic g ow h and heal h is ejec ed a he 1% signi icance le el o all he conside ed
h eshold a iables. The h eshold es ima es o SURV
0
and LEX
0
a e 78.8 and 58.4, espec i ely. Fo
GDP
0
, he es ima ed h eshold is $ 2152.
Table 2. The mac oeconomic e u n o heal h: IV panel h eshold es ima es.
Th eshold a iable
Dependen a iable: g ow h a e o GDP pe capi a
SURV
0
LEX
0
GDP
0
Sup W46.4394 71.2090 33.657
(0.000) (0.000) (0.000)
Es ima ed h eshold (^
c) 87.82 58.36 2152.16
qi^
cqi>^
cqi^
cqi>^
cqi^
cqi>^
c
GDPCAPITA (−1) ––––0.0122 −0.0007
(0.0048) (0.0002)
LOG_GDP pe capi a (−1) −0.4412 −0.4835 0.0353 −0.2370 ––
(0.4912) (0.1737) (0.2045) (0.0925)
Su i al a e 0.0087 0.0508 ––0.0990 −0.1025
(0.0403) (0.0151) (0.0665) (0.0358)
Li e expec ancy −0.0008 0.0408 ––
(0.0322) (0.0132)
Seconda y schooling 0.9520 0.3513 0.1765 0.1984 2.7262 6.1859
(0.4274) (0.1275) (0.3329) (0.0956) (0.8517) (1.8373)
G ow h o physical capi al 0.9068 0.9643 0.5689 0.5269 0.66291.1025
(0.1414) (0.0875) (0.0736) (0.0489) (0.3935) (0.2566)
Popula ion g ow h 0.6086 −0.3369 0.0305 0.0220 1.6913 3.5181
(0.4462) (0.1173) (0.1721) 0.0862 (0.4778) (1.1828)
G ow h o wo king popula ion 0.6941 0.4959 −0.0553 −0.2781 0.4172 0.5445
0.0911 (0.0481) (0.4985) 0.1131 (0.1171) (0.0953)
Obse a ions 245 830 205 870 168 907
No e: As e isk ,, indica e s a is ical signi icance a he 10, 5, and 1%, espec i ely. S anda d e o s a e in pa en heses.
Table 3. The mac oeconomic e u n o heal h: IV panel h eshold es ima es.
Th eshold a iable
Dependen a iable: g ow h a e o GDP pe wo ke
SURV
0
LEX
0
Sup W48.1945 71.2090
(0.000) (0.000)
Es ima ed h eshold (^
c) 87.82 58.36
qi^
cqi>^
cqi^
cqi>^
c
LOG GDP pe wo ke (−1) −0.4771 −0.5494 0.0353 −0.2370
(0.5360) (0.1985) (0.2045) (0.0132)
Su i al a e 0.0175 0.0633 ––
(0.0500) (0.0195)
Li e expec ancy ––−0.0008 0.0408
(0.0322) (0.0132)
Seconda y schooling 0.9494 0.3416 0.1765 0.1984
(0.4276) (0.1253) (0.3329) (0.0956)
G ow h o physical capi al 0.6969 0.4962 0.5689 0.5269
(0.0920) (0.0481) (0.0736) (0.0489)
G ow h o wo king popula ion −0.0811 −0.0267 0.0305 0.0220
(0.1400) (0.0867) (0.1721) (0.0862)
Popula ion g ow h 0.6266 0.3324 −0.0553 −0.2781
(0.4525) (0.1164) (0.4985) (0.1131)
Obse a ions 245 830 205 870
No e: As e isk , indica e s a is ical signi icance a he 10, 5, and 1%, espec i ely. S anda d e o s a e in pa en heses.
COGENT ECONOMICS & FINANCE 7
